Monday 10 December 2012 11.34 EST
First published on Monday 10 December 2012 11.34 EST

Ian Swales MP was right in his Guardian Northerner article last week to recognise the importance of rebuilding economic resilience in the north east, and in particular of Redcar and Teesside. However his analysis of his government's role in supporting recovery here smacks more of wishful thinking than of reality.

Instead of defending Margaret Thatcher's legacy on Teesside, as he did in a recent debate in Parliament, Mr Swales ought to look to what more his government should be doing to drive growth in a region with the potential to be at the heart of Britain's economic revival. The truth is that this double dip recession – the longest in history - has been made far worse and lasted far longer due to the government's choking off of investment, and ideological dismantling of many of the regional and sub-regional levers of investment.

While the Regional Development Agencies were far from perfect, One North East drove a huge amount of investment - around 82% of all the inward investment that came into the north-east in 2009-10 came through the inward investment team based at One North East—£387 of investment in the region for every £1 of government spend. The accusation that they were focused disproportionately on Tyneside is unfair – for example, One North East played a crucial role – along with Community Union and the late Geoff Waterfield in securing Sahaviriya Steel Industries funding to ensure the future for the Teesside Cast Products steelworks at Redcar. It also invested heavily in our critical chemical cluster and engineering to support the wind turbine and motor industries. It was action like that that made our region a net exporter and ensured our economy was more diverse than before Labour came to power in 1997.

Ni-tech and new-tech industries such as turbines need a fair regional wind. Photograph: David Sillitoe for the Guardian

However, the reality now is that the government has dismantled them due to an ideological rejection of any degree of state activism, and business-led Local Enterprise Partnerships are, frankly, struggling to fill the void. Michael Heseltine recognised this in his recent report, saying that 'at present LEPs simply do not have the authority or resource to transform their locality in the way our economy needs'.

Meanwhile, the Regional Growth Fund (RGF) praised so fulsomely by Mr Swales is failing to live up to its multiple press releases. Current estimates are that of the £1.4 billion announced to great fanfare in rounds 1 and 2, the amount that has actually left the Department's bank account is just £60 million. Despite Teesside doing relatively better than other areas, very little of the cash is yet to materialise.

It is clearly going to take more commitment and determination from this government if it is to truly unleash the full potential of the North East economy. A recent ippr North report showed, if the government had a more balanced approach to economic development, the north could contribute a further £41 billion to the broader UK economy. As David Miliband said in the debate he called recently in Parliament, ' we regard the north-east economy as an asset for the UK, not as a problem for the UK.'

Here in the north-east we have a trade surplus that is higher than the UK average, faster growth in exports than the UK average, world-class universities, and we are leading the way globally from advanced manufacturing, chemicals, pharmaceuticals, automotives, renewables and the low-carbon economy in energy—particularly in offshore wind - and in carbon capture. The north east could be the engine for British economic revival. It needs a government that believes in it and is willing to invest in it.

Below I highlight five areas that I believe urgently need to be addressed to help drive the north east economy:

- Skills and youth employment – long term youth unemployment has trebled in the last year, and the north east lags well behind the rest of the country in terms of employment rates. There needs to be a more integrated approach to skills (led sub-regionally, potentially by the LEP) that prepares young people for the opportunities that our future economy holds. A sub-regional version of the Future Jobs Fund, so successful under the last Labour government, could be initiated to get young people into work (funded by the bank bonus tax as proposed by Ed Balls).

- An active industrial policy should set out how Britain will support the advanced industries of the future and put them at the heart of our economy. As Shadow Industry Minister Iain Wright MP has said 'We have a narrow window of opportunity to ensure that we can be at the forefront of the biggest shift in manufacturing, technological and industrial focus for a century and reap the economic and social reward'.

- Transport and connectivity – the Regional Growth Fund failed to award a bid to the Durham/Tees Valley airport which could have substantial implications for business development in the region. Teesside generally needs greater investment in its transport infrastructure, particularly in relation to the huge potential of Teesport, and connecting Middlesbrough by a direct train line to London. The HS2 is only planned for Birmingham, when connecting it to the North East could have a real impact.

- A regional investment bank – Ed Miliband is drawing up proposals for a UK national investment bank. It would be good to see that operate with strong regional emphasis, lending to small and medium enterprises, and linking with a broader strategy to support sub-regional industrial supply chains.

- Rethinking public sector cuts – the drastic cuts to the public sector, which are disproportionately affecting the north, have not only affected individuals working in the sector, and had a devastating effect on front-line services but are also impacting on the economic recovery, leading to a indirect or induced effect on the private sector resulting in a 10% drop in the regional economy (Oxford Economics research undertaken for Northern Group of Labour MPs).

These are just a few examples of how this government can demonstrate that it is serious about releasing the potential of the North East, and serious about putting the North East at the heart of Britain's economic revival.